Federal Budget Cuts Could Eliminate Hsc

Health Systems Council of Eastern Pennsylvania (HSC) may be phased out this fall by federal budget cuts and government-driven competition among hospitals.

The agency - which reviews major health-care projects in Lehigh, Northampton, Carbon, Berks and Monroe counties - is one of more than 140 across the country scheduled to be without funds Sept. 30, unless rescued by federal or state legislation.

"It will take a positive act from Congress to reauthorize funds," HSC Executive Director Pete Archey said, calling this the most serious threat to the agency since he started with it in 1980.

Nearly all of the HSC's $233,000 budget comes from the federal till.

The state Health Department's Bureau of Health Planning, which employs about 20 and oversees the recommendations from the regional agencies, is also at stake.

Several federal bills are pending that could completely eliminate aid for the health systems agencies, provide three more years of funding under state control or reauthorize the system as is.

However, stopgap measures appear unlikely, legislators agree, because of Reagan administration efforts to reduce the federaldeficit.

State committees are evaluating the performance and cost of the eight health systems agencies in Pennsylvania to determine if the system can and should be continued.

"There's a real strong feeling we should at least modify if not eliminate the system all together," said state Rep. Donald Snyder, R-134th District.

Snyder co-sponsored a resolution charging the Budget and Finance Committee with making a recommendation on the "effectiveness, efficiency, structure and further need" for the program, called "Certificate of Need (CON)" in Pennsylvania.

"We anticipate the federal government will terminate funding of the system the end of September. The question will be, 'Should the state pick up the funding and continue the process?' " Snyder said.

"Some say the CON never worked properly to begin with. At a hearing last summer on health care cost-containment bills, authorities testified that 98 percent of applications are approved, whereas in other states the percentage of approvals is 80 percent or less.

"With the new fixed-cost reimbursements (for Medicare and Medicaid patients) the government is no longer concerned about how much it costs a hospital to provide services. It is only paying fixed fees, so only the efficient hospitals will stay in business. (The federal government feels) we don't need to check costs anymore."

He said there are two schools of thought: "The purists say competition for dollars itself will bring greater efficiency. Then, another school says we need CON to guarantee there isn't competition - because, if we allow one or two to get so strong, they will have a monopoly. Then, where is your competition?"

Hospital representatives support a free, competitive market. Still others concerned with health care costs in the community warn that the industry is not truly competitive unless hospitals share their prices and statistics on quality of care with consumers.

Meanwhile, HSC will file an application for renewed funding in two parts: One requests $186,177 in federal funds for a full year, assuming congressional action is taken to rescue the review process; and the other is for September only, at $15,514.

Although its staff size and budget were drastically reduced over the years, Archey says HSC has been a positive force in restraining the rate of growth in health care costs. He added that the agency played an important role in involving and exposing the public to various health care issues.

"Even if the industry goes to full competition, which I don't think will occur, there's a time transition. . . . Even if it is to be reached, I think there's a role for the planning agency during that transition," Archey said.

James Brush, HSC primary reviewer, recalled several recent projects that he said saved the community unnecessary costs or construction.

He said Good Shepherd Rehabilitation Hospital and area residents benefited from the review process in recent years by taking the agency's advice and building an addition to the hospital on its current campus rather than on the campus of Lehigh Valley Hospital Center.

Brush said Good Shepherd was able to add 60 beds instead of 40 for the same $10-million project cost and to maintain continuity of care.

Reading Hospital officials also publicly praised the agency for urging them to take a more conservative approach to expansion now that many hospitals are experiencing empty beds and declining admissions.

HSC staff advised Reading to eliminate some beds and operating rooms, resulting in a reduction of the total project cost from $44 million to $29 million, Brush said.

HSC currently reviews health care projects for the five-county region and revises a plan for services needed in the community with a staff of five.